Current works have focused on the role of urban heritage to sustainable development in postwar cities and have highlighted the significance of participatory and inclusive approaches that involve citizens and key stakeholders in the conservation and regeneration of heritage areas. However, this task is rather complex and challenging, especially in areas inhabited by multiple ethnic groups. Skills in negotiation and building trust are as important as skills in restoration and conservation of the physical fabric. However, the current literature lacks in-depth understandings of how negotiations in these contexts work and what we can learn from the past. The aim of this paper is to explore this issue by using a case study analysis, in particular, that of Kosovo. This paper looks at how the process developed during the implementation period of Annex V of the Comprehensive Proposal for the Kosovo Status Settlement (CSP) related to cultural heritage preservation. We analyze the sociocultural and political dynamics on the ground by focusing on Article 4 that deals with protective zones. With a critical examination of the approaches taken by stakeholders, including the public discourse and the example of the historic centre of Prizren, we suggest rethinking the implementation of Annex V as a sustainable option, rather than looking at other (beyond Annex V) alternatives that could potentially undermine the inter-community rebuilding efforts, and instead of creating the basis for sustainable cultural heritage preservation and reconciliation would eventually contribute to escalation and deepening of the conflict.